Remind me, what’s an executive order?

Executive orders are directives ordered by the president of the United States that direct government agencies and authorities to take particular actions. While they are not laws, they have the force of law and impact how existing laws are implemented or enforced.

Executive orders impact the agencies of the executive branch and for that reason do not need the approval of Congress. They must be within the president’s constitutional authority and may be challenged in court if deemed unconstitutional.

Executive orders may be rescinded, overturned by future presidents, or challenged in court, and enforcement top priorities can change throughout any administration.

The brand-new administration’s actions have significant results beyond executive orders. For more on mitigating risk, worldwide companies can take brand-new opportunities by remaining nimble.

Implications of the executive orders for DEI efforts and work in private-sector organizations

On Jan. 21, President Trump issued “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which reverses various prior executive orders and memoranda, consisting of Executive Order 11246 (EO 11246) signed in 1965 by President Lyndon B. Johnson.

EO 11246 required every government agreement to consist of a declaration that the contractor will not victimize any worker or candidate for work based on race, creed, color, or national origin.

Despite President Trump’s new executive order, the underlying federal anti-discrimination law remains the same for private-sector employees.

However, the executive order signals that there may be altering enforcement concerns in the new administration. The order directs all federal agencies to “fight unlawful private-sector DEI choices, mandates, policies, programs, and activities.”

In December 2024, President-elect Trump tapped Harmeet K. Dhillon to lead the Justice Department’s civil liberties workplace, indicating his record of “taking legal action against corporations who utilize ‘woke’ policies to victimize their workers.”

In addition to withdrawing EO 11246, the Jan. 21 executive order advises each agency of the federal government to identify “up to nine possible civic compliance examinations” of economic sector entities within 120 days of the order - by May 21, 2025.

The economic sector entities subject to these investigations consist of openly traded corporations, big nonprofits - consisting of bar associations - large foundations, and universities whose endowments exceed US$ 1 billion.

Organizations that may be targeted should ask:

- What is my company’s risk tolerance?
- How will workers respond to the business’s actions?
- How will consumers and stakeholders react?
What in-house counsel must think of:

Assess any federal agreements and grants

- Determine if they include any terms or conditions connected to DEI that might contrast with existing laws and guidelines
Review your organization’s existing DEI policies to comprehend your danger

- Get ready for increased analysis and possible civil compliance examinations
Document, file, file

- Hiring and recruitment procedures
- Performance evaluations and promotion decisions
- Training materials and attendance records
- Any modifications to DEI policies
Implications for federal specialists

To name a few procedures, the Jan. 21 Executive Order needs the heads of federal companies to include specific terms in every agreement or grant award:

- “A term needing the legal counterparty or grant recipient to agree that its compliance in all aspects with all applicable Federal anti-discrimination laws is product to the federal government’s payment choices for functions of section 3729( b)( 4) of title 31, United States Code”